How to react to a crisis – Jasmine Birtles

Jasmine Birtles is a TV and newspaper journalist and personal finance expert. In her column she’ll be helping you get the most from your investment and reach your personal goals. 

“Be fearful when others are greedy, and greedy when others are fearful,” said Warren Buffett, the fourth richest man in the world.

Buffet, the CEO of the mega-successful corporation Berkshire Hathaway, has spent a lifetime investing in companies – sometimes buying the company in its entirety – and making insane profits for himself and investors in his company. In 1980, a single share in Berkshire Hathaway cost just under $300. Now it would set you back over $250,000.  So you can see that Buffett knows what he is talking about. At age 89 he’s seen a few economic ups and downs in his life too. 

Take the long view

To someone like Buffett, this is a ‘buy’ opportunity, or it soon will be. He and other calm investors take the long view. They are not fazed by volatility, they relish it. Buffett and his team have been analysing companies ripe for investment for years and they then play a waiting game, waiting for them to drop in price enough for them to pick up a bargain. 

Finally shares (or stocks as they call them over the Pond) are looking cheap, and at some point soon he will start to buy and buy big. Buffett is a ‘buy and hold’ kind of guy, holding companies for years…even decades…as he knows that it’s pointless to bother about what happens to the market in the short-term but that over time, good investments will go up.

For example:

  • In 1975 the stock market lost 72% of its value. Over the next twelve months it jumped back up by 100%
  • The 2008 financial crisis was a time of utter market turmoil, but if you happened to have £1,000 in an average investment company just before the crash it would have grown to £2,348 today

In other words – wait it out and you will win.

Be contrarian

Right now I’m seeing questions on social media along the lines of: “Should I sell my shares and ditch my pension? Should I just get rid of all my investments and stick the money under the mattress”.

My answer is ‘don’t panic – go against the crowd’. When all around are losing their heads and selling their investments, stand firm and don’t be spooked.

Buying high and selling low is exactly what we shouldn’t be doing. We need to do the opposite, which is why Buffett and his ilk tell us all to be fearful when others are greedy (i.e. don’t buy when everyone else is buying) and greedy when others are fearful (that is, buy when everyone else is selling).

Should you worry about your pension?

No. If you’re more than ten years away from your retirement, you can ignore the losses you will be incurring right now. 

At some point – maybe in a few months or maybe next year – the stock market will bounce back again. In fact, I think that when it bounces back it will do so in a really BIG way. Even if it’s just a moderate bounce back, though, it will be worth the wait.

If you’re coming up to retirement it’s likely that your company or private pension is being ‘lifestyled’, which means that your money has already been moved out of equities (shares) and into less volatile, more boring investments such as bonds, gilts and cash. You might have lost some money that was invested in the stock market part but overall, not nearly so much.

If your pension hasn’t been lifestyled then it’s worth looking at putting off retirement for a bit, unless you have decent pots of cash elsewhere to give you a good standard of living.

What about your Funding Circle money?

Very sensibly, you have ‘diversified your portfolio’ by also investing in peer-to-peer lending products, like Funding Circle, where you lend to small businesses. It’s likely that returns on this investment will be lower for a while as small businesses are under more pressure financially.

But now is not the time to sell investments. While economic troubles cause issues short-term, once they’re over, economies bounce-back. 

The more mature peer-to-peer platforms like Funding Circle have had 10 years to work on their risk modelling and preparation for such events, which stands them in good stead. As you’d expect, they’ve also made some changes to their lending criteria to protect returns.

With the large injections of cash that the Government is putting into the economy, together with quantitative easing and the drop in interest rates, businesses have a lot of support and can pick again when this is over.

As with shares, it’s about playing the long game and ignoring short-term ups and downs for the bigger picture, which takes longer to become clear.

Should I buy or should I go now?

For most people, this is a dip that will be followed by a bounce, so keep your head and your money in the same place.

In fact, if you haven’t already filled your £20,000 ISA allowance this tax year, consider putting some in by April 5th, either in equities or Alternative Finance or a mixture of the two. 

I’m not saying that we have hit the bottom of the market yet – no one can call that accurately – but we are certainly a long way down and, as China has already started to go back to work, it’s likely that the upturn, or flattening out at least, won’t be too far away.

Having said that, no one really knows when the market will be up or down, so rather than pull your money out in one go, or even buy everything you can in one go, the best strategy is to invest small amounts of money into a range of products (peer-to-peer lending, equities, bonds and so on) every month, whether they are up or down, so that you get a mix of good and bad. 

In the final analysis, if you wait for long enough, you’re more likely to win.

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice.

To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here. If you have any questions, please speak to your professional adviser or seek independent specialist advice.

By lending to businesses your capital is at risk. The tax-free entitlement of an ISA depends on your circumstances and may change. Funding Circle is not covered by the Financial Services Compensation Scheme.

Chief Risk Officer’s UK update – Protecting your returns over the coming months

Jerome Le Luel joined Funding Circle as Global Chief Risk Officer four years ago; bringing with him more than 20 years of experience in risk management. His previous roles include Global Head of Risk Analytics at Barclays Bank and Global Chief Risk Officer at Barclaycard, where he successfully navigated their global portfolio through the 2008/9 recession.

Jerome leads a team of more than 100 risk professionals across the markets Funding Circle operates in: including data scientists, credit risk analysts and credit assessment experts.

In this update, Jerome talks through how the current coronavirus developments may affect the businesses you lend to, and the work we have done to protect your returns throughout this period.

We are prepared for this period of uncertainty

Firstly, I hope that you and your loved ones are keeping yourself safe and healthy during this time; your wellbeing is important to us. At the same time, I am aware that many of you will be feeling anxious about what the current situation means for your investments. As the impact of the coronavirus continues to make itself felt across our country, I wanted to provide you with an update. 

Over more than twenty years in risk management, I have experienced three credit crises and a recession. While economic disruption and dislocation causes short-term pain, economies do bounce back as people return to their daily lives. While we do not yet know the full effects of this crisis on the UK economy, this time will be no different. Part of my role as Chief Risk Officer is to prepare for these events, and my team has been working hard to protect your investment.

Coronavirus has restricted economic activity

The spread of coronavirus has restricted the ability to take part in economic activity. As people temporarily cut back on spending, small businesses are affected in different ways. Some, such as restaurants, have felt an immediate impact as they are forced to temporarily close. Some businesses may start to feel the effects later if the economy slows down. Many businesses, like farmers or doctors, are likely to continue to trade normally throughout. As your lending is diversified across lots of small businesses, your portfolio will contain a mix of the above. 

However, I firmly believe that we are entering this challenging time in a strong position. We have leveraged over ten years of business lending data to build powerful risk controls, my team has a wealth of experience in risk management, and our loanbook contains quality and creditworthy businesses. In addition, over the last week the Chancellor has announced a range of unprecedented and wide-ranging measures to provide ongoing support to the UK’s small businesses. This will go a long way towards mitigating the economic impact of the virus.

Protecting your returns is a key priority

Funding Circle has the right tools to navigate the coming months. Operationally, our staff are already equipped to operate remotely, they are working from home and continuing to serve our customers efficiently. We are also the best-capitalised lending platform in Europe. When we became a public company in 2018, we raised a significant amount of capital and at the end of last year we had c. £320m in equity capital.

This means that Funding Circle has sufficient cash to weather uncertain periods. Importantly, we are also able to make decisions that prioritise protecting investor returns over short-term commercial interests. As part of this, my team has introduced the following measures: 

  • We have tightened our credit risk parameters – Last year we tightened our lending in response to changes in the macroeconomic environment. In light of the current situation we have decided to initially take a prudent approach and extend this tightening, strengthening our criteria for businesses from vulnerable areas of the economy. We have also adjusted our pricing—taking into account how the economy may perform—to maintain projected returns for new loans at current levels. We are focused on originating loans that we expect to be resilient during this period.
  • We have enhanced our risk monitoringWe have always paid close attention to changes in both our loanbook and the wider environment. This has been heightened, with my team frequently analysing data for more detailed insights, in order to quickly spot and understand signs of stress as they emerge. With this, we are ready to make rapid and effective adjustments to our credit parameters if needed.
  • We have strengthened our collections and recoveries capabilitiesWe are dedicating extra resources to our Collections and Recoveries team to support the businesses you are already lending to. Some businesses may need help to cover short-term costs in the coming months; ensuring we have the people and tools to bridge these periods will help support these businesses and get them back on their feet, maintaining your monthly repayments over the long-term. Ultimately, our goal is to minimise any credit losses that could have been avoided.

Our loanbook has been built to remain resilient

Forecasting is never an exact science. It’s impossible to predict exactly how the economy will perform in the future, especially in a fast-moving situation. However, a key pillar of our risk management function has always been to build a resilient loanbook that is well-positioned to withstand an economic downturn.

For example, our loans have been priced so that if bad debt were to increase multiple times over, our loanbook would still be likely to deliver positive returns overall, once loans have been repaid and recoveries received. We will continue to monitor the environment closely, and regularly refresh our loan projections through our loan statistics page using the latest available data.

Your lending is supporting the economy at a vital moment

Small businesses are vital to the success of the UK economy; they provide 50% of GDP and 60% of private-sector jobs. Over the coming months, there will be good, creditworthy businesses in need of help. Their ability to access finance will be more vital than ever, and your lending will form an integral part of this support.

We hope you have found this information useful. If you have any questions, please don’t hesitate to get in touch. Remember, by lending to businesses your capital is at risk, and is not covered by the Financial Services Compensation Scheme.

Jerome Le Luel

Disclaimer

This material contains certain tables and other statistical analyses that have been prepared by Funding Circle. Numerous assumptions have been used in preparing this statistical information, which may or may not be reflected in the material. The statistical information should not be construed as legal, tax, investment, financial, or accounting advice. The Information is provided as of the dates shown and is subject to updating and revision, and may change materially without notice. Subject to applicable regulations, no person is under any obligation to update or revise the information. The information may contain various forward-looking statements, which are statements that are not historical facts and that reflect Funding Circle’s beliefs and expectations with respect to future events and financial and operational performance. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond the control of Funding Circle and which may cause actual results or performance to differ materially from those expressed or implied from such forward-looking statements. Nothing contained within the information is or should be relied upon as a warranty, promise, or representation, express or implied, as to the future performance of any loans. Any historical information contained in this statistical information is not indicative of future performance.

An update on coronavirus 

With the impact of coronavirus continuing to be felt, we know that many of you are concerned about your investment and the wider financial landscape. We want to reassure all our valued investors that we are taking appropriate measures to respond to the situation, and give you some detail on the various issues going on at the moment.

Protecting investor returns

As a responsible lending platform, protecting returns through this period is our priority for investors. We have already made changes to our risk models and we’ll continue to closely monitor our credit policies and make further adjustments where necessary to protect your returns.

You can read more about the steps we’ve taken to protect your returns in our Chief Risk Officer’s update.

We’re open and here to support you

We are well set up to continue to support you and all our customers throughout this period. Following government guidance to work from home where possible, our team is already working remotely. 

Over recent years we have taken many steps to build a long-term business that can remain resilient through uncertain times. We are a very well-capitalised business and are well prepared to support investors and businesses.  

Supporting businesses that are affected 

We have always prided ourselves in serving the thousands of small businesses that are an important engine of growth for the UK. We know that some of them will be affected by coronavirus and we are working with them to support them through this difficult period. We have increased capacity in our teams to provide support, helping them to navigate this difficult period and continue to service their loans. We have a range of potential measures we can use and work with each business on an individual basis.

Changes to the Bank of England base rate and stock market volatility

The Bank of England announced it is cutting the base rate to 0.1%. This move does not affect your projected return, as each loan is assessed on a case-by-case basis and given a fixed interest rate. 

There has also been a lot of volatility across stock markets recently. As you lend to a diversified portfolio of loans on fixed terms, your returns are not as exposed to the price movements that occur on stock markets.

We’re here to help

This is a fast-moving situation and we’ll be providing more information in the coming days. As always, if you have questions about your account or any of the above, please get in touch with our team at contactus@fundingcircle.com.

Many thanks

The Funding Circle team

 

Building a long-term business

We want you to have the best experience possible when lending through Funding Circle. When we founded the business 10 years ago, we opened up small business loans as an asset class, allowing members of the public to lend to them for the first time. 

Since then more than 90,000 investors have lent over £6.2 billion through our platform, helping over 57,000 businesses to grow and achieve new success. Investors have earned c. £330 million in interest along the way, and loans taken out since 2012 are on track to deliver returns of 4-7%*.

As our business and the industry has evolved, we’ve continued to adjust and improve our service. Today we’re as committed as ever to helping investors earn attractive returns, and we’re excited about what the future holds.

New regulations will help set industry standards

We’ve always been big supporters of regulation, and believe the new regulations are really positive and set a good bar across the industry. We’ve seen some businesses closing their doors as a result, but overall I think we’ll see a stronger, more mature industry going forward.

The FCA has been consistent with what they set out to do, reviewing the market as it has evolved. There have been a variety of innovative business models, so it’s a natural progression that as more regulation has come in, some providers have left the market. Those that remain will be the more resilient lenders who can provide for investors and borrowers alike.

A diverse community of investors makes us more sustainable

We want to have a very sustainable platform that will last long into the future. In order to do that, we need diversity of funding that delivers great returns across all the different funding sources. That’s why, at Funding Circle, individual people (known as ‘retail investors’) lend alongside larger institutions.

The loans you get as retail investors are the same loans that institutional investors get. We think that’s a real positive – you are investing on the same terms as institutions are, getting the same product and the same returns.

Other platforms have chosen to close their retail business, but at Funding Circle you remain a key part of our long-term plans.

Adjusting our credit criteria to help returns

We focus on making sure that our loan book and our credit models are as resilient as they can be. We regularly stress-test our loans to see what could happen in different scenarios and, even if losses doubled, overall returns would remain positive. 

Last year we tightened our lending criteria. This was in response to some higher risk loans showing lower returns due to the macro environment, and the initial results show that this has helped improve returns. You can read more about this in our recent update from Chief Risk Officer Jerome Le Luel

As well as adjusting our lending criteria, we also made changes to how investors sell loans. We launched a new tool that allows investors to sell a portion of their loans regularly, so that they start getting funds back more quickly. 

Our share price may change, but we’re focused on building a long-term business

It’s important to remember that the return you make depends on the performance of loans in your portfolio, and is not affected by our share price.

In 2018 we chose to list Funding Circle on the London Stock Exchange. By becoming a public company we were able to raise a significant amount of investment and, as a result, we’re a very well-capitalised business. This not only makes us more resilient, but means we can be more innovative, launch new products and not be reliant on raising equity funding.

The share price will move up and down, often due to things that aren’t in our control. However, our focus is on how we build a really great long-term business, that supports thousands of small businesses and provides great returns for our investors.

Building for the future

We recognise that a key cornerstone of our success has come from the thousands of investors who choose to lend to small businesses through our platform. You create jobs, support communities and drive the economy forward, and we’re proud to help you make a real impact on the country.

We believe the best way to continue to support you is to create a really resilient, sustainable business that will last for many years to come. We’re excited about the future, and we’ll continue to listen to your feedback and keep working to give you the best experience possible.

Lisa Jacobs – UK Managing Director

Remember, by lending to businesses your capital is at risk, Funding Circle is not covered by the Financial Services Compensation Scheme. Data correct as of 31st December 2019. 

*Loans taken out since 2012 are projected to deliver annualised returns between 4.0 – 7.4% after fees and bad debt. It can take up to five years for loans to be fully repaid, so these ranges take into account how loans are currently performing and how we expect them to perform in the future. Data is from Funding Circle. Find more detail at fundingcircle.com/uk/statistics

Funding Circle publishes 2019 Full Year Results

As a public company, each March and August we publish our Full and Half Year results. Following today’s publication of our 2019 Full Year Results, we wanted to take a look back over some of last year’s highlights, and update you on some of the exciting things we have been working on.

2019 review of our UK business

A record £1.6 billion was lent to small businesses through the Funding Circle platform in 2019. At the end of the year, tens of thousands of small businesses were benefiting from more than £2.6 billion in loans under management; including a school uniform supplier in Bridgend, a bridal shop in Essex, and a windsurf instructor on the Sussex coast. Your lending is directly contributing to the jobs, tax receipts and economic growth these businesses create.

2019 was also a year of challenge, economically and politically, for the UK —which we were not immune to. Our Chief Risk Officer has previously discussed how we proactively tightened lending in response to some higher risk band loans showing lower returns due to the macro environment. While this affected the proportion of borrower applications that we could accept and our revenue growth expectations for the year, this prudent step protected investor returns. The early signs have been positive, with the chart below showing the percentage of loans, three months after being taken out, that were 10 or more days late.

Percentage of loans (by loan amount) 10+ days late, 90 days from origination

Source: Funding Circle

Loans originated in 2019 are expected to deliver annualised returns of 5–7%.* In times of uncertainty, it’s important we are prepared to do the right thing for the long term future of the business—and the investors who lend through our platform—even if it means slowing growth or affecting our profitability in the short term. We will continue to take this approach in the future. While it’s too early to predict any impact of the ongoing development of the coronavirus, we are continuing to monitor the situation very closely and are prepared to make prudent and timely adjustments where necessary.

Continuing to deliver for investors

As part of our strategy to diversify funding sources, we further widened the universe of investors who lend through our platform in 2019 by launching new institutional investor products; including a Funding Circle-sponsored, asset-backed bond programme and a UK Economic Impact Fund. Continuing to deepen and diversify our sources of investor funding will help to ensure Funding Circle continues to channel funds to small businesses throughout each stage of the economic cycle. 

For retail investors, we also made improvements to the secondary market in December; providing investors with an equitable and more regular way of accessing available liquidity. We’re pleased that these changes are enabling all investors who wish to access their funds early to sell loans regularly.

Helping more businesses access the finance they need to grow

Over the last ten years 57,000 UK businesses have accessed more than £6.2 billion in finance through Funding Circle. In the last three months of 2019 net lending to small businesses—the difference between new lending and repayments received on existing loans—through Funding Circle was higher than the major UK banks combined.    

However, we know there are more small businesses who we can serve. To help achieve this, in 2019 we introduced a major platform innovation; the completion of the initial build of our new instant decision lending platform. This will provide a best-in-class borrower experience, enabling greater speed and ease of access. 

The new platform includes historical data on approximately 1 million loan applications from the last ten years and is powered by Funding Circle’s 8th generation of artificial intelligence-enabled credit models. By utilising best-in-class technology and data analytics, we can deliver a revolutionary borrowing experience without compromising our assessment process. We are piloting this new technology for a small number of businesses initially, and will begin rolling out this market-leading functionality to approximately 50% of businesses by the end of 2020.

We are well-positioned for a successful 2020

Our work over the last twelve months has put Funding Circle in a strong position that will allow us to serve our customers well. Investments in our data and technology capabilities will help us deliver improved investor returns, deep and diverse sources of funding and an unbeatable borrower proposition.

In 2019 we grew group revenues by 18% to £167 million, while our UK business—our largest—delivered an operating profit in the second half of last year, with revenues of £108m. Following our Initial Public Offering, Funding Circle is the best-capitalised lending platform in the UK.

We also operate in the US, Germany and the Netherlands; whose markets are collectively six times as large as the UK**. In the US, our lending to small businesses would place us inside the top 50 largest US banks. In Europe, we are reorganising our German and Dutch businesses towards a new model that is better suited to those markets and will help accelerate our path to group profitability. We are well-positioned for a successful 2020.

By lending to businesses your capital is at risk. Not covered by the Financial Services Compensation Scheme.

The Funding Circle team

*Projected returns as of 31st December 2019. The projected annualised return shows the return, after fees and bad debt, that loans are currently estimated to achieve. Loans are shown by the year they were taken out. The return is calculated by combining the actual annualised return received to date, and our latest return estimates, including expected recoveries, for the remaining term of loans that have not yet been fully repaid. Past performance is not a guarantee of future returns and by lending to businesses your capital is at risk.

**Source: OC&C estimates

Get up to £500 in Amazon Gift Cards when you add and lend funds

For a limited time only, you can receive gift vouchers when you lend £15,000 or more through your Funding Circle account! Transfer funds into your ISA account today and you could treat yourself to an Apple Watch, an Amazon Echo, a new wardrobe or whatever you need with Amazon gift vouchers.

What value Amazon vouchers can I claim?

The amount you receive depends on how much you add to your account and lend to businesses:

  • Add £15,000 to get £150 gift card
  • Add £20,000 to get £200 gift card
  • Add £30,000 to get £300 gift card
  • Add £50,000 to get £500 gift card

What do I need to do?

Add funds to your ISA account and lend the amounts above by 30th April 2020 to get the voucher amount you want. The amount you lend will determine how much you’ll qualify for. If you have both ISA and Classic accounts, we’ll look at the amount added between them.

You also need to have lending switched on and keep those funds lent out until the end of June 2020. If you withdraw funds you may qualify for a lower voucher amount or no longer qualify. Read our blog for more detail. Terms apply.

Remember, tax rules depend on your circumstances and may change. Capital at risk. Not covered by the Financial Services Compensation Scheme.

Enjoy lending,

The Funding Circle team

How to get the most from ISA season – Jasmine Birtles

Jasmine Birtles is a TV and newspaper journalist and personal finance expert. In her column she’ll be helping you get the most from your investment and reach your personal goals. 

It’s that time of year when you suddenly realise that there are only a few weeks left to make use of the Government’s annual tax giveaways. Well, maybe ‘giveaways’ is a rather strong word, but at least with tax incentives, like pensions and ISAs, there’s the potential to invest some cash each year knowing that it’s yours to keep.

The ISA limit is a pretty generous £20,000 per tax year and if you’re able to max that out the tax savings over the years will add on tens of thousands more. So let’s look at ISAs for this tax year and work out how to make the most of the opportunities that they offer. 

The best type of ISA for you

There are a full seven types of ISAs on the market which is quite enough to choose from! The question is which one (or ones) is right for your needs?

Long-term

Originally ISAs were meant as an addition to your pension – an element of your retirement savings. If you view your ISA in this way (as I do) then you obviously need to go for investments that give high returns. That way they will beat inflation over time and create an impressive pot of cash to live off later on.

For this, Equities or Innovative Finance ISAs make the most sense as, overall, they tend to produce the best returns over time. If you lack confidence in choosing equities to invest in, simply opt for a cheap, straightforward index tracking fund that follows the FTSE100 or the FTSE All Share. Just remember that stocks and shares are a long-term investment so don’t move your money for at least five years, even if the stock market suffers a fearful crash in the meantime.

Innovative Finance ISAs are also more likely to produce higher returns – and outstrip the cost of inflation – over time, so they are worth considering. These IFISAs are also a good way of ‘diversifying your portfolio’ if you already have investments in Equities ISAs and have quite enough of a cash cushion in savings accounts. 

Find out how you can earn tax-free returns with the Funding Circle ISA.

Short-term

If you are looking to access your cash in the shorter term, then Cash ISAs are the best bet, although the returns are low. Many people have, understandably, stopped taking out Cash ISAs since the tax on the first £1,000 of savings interest was lifted in 2016. They have also been put off by the fact that Cash ISA rates have dropped considerably in recent years and are particularly low this year.

However, Sarah Coles of Hargreaves Lansdown says that people with considerable savings who like cash investments shouldn’t rule them out: “as your savings build, you could save your way into a tax problem” she says. “And because the tax-free savings allowance drops as your earnings increase (£500 for higher rate and £0 for additional rate taxpayers), you could earn your way there too. If rates rise or the savings allowance is cut, you could face tax on your savings far sooner, so an ISA is the only way to protect your savings from tax, for life.”

Personally I have never put money in a Cash ISA because I see my ISA investments as part of my retirement pot and Cash simply doesn’t keep up with inflation over the long-term. But if you have short-term goals, such as saving up for a big holiday, a car or a deposit on a house, then Cash ISAs are a more stable bet.

Youth investments

Speaking of saving up for a deposit, if you’re under 40 then the Lifetime ISA is a no-brainer of an investment. It has a limit of £4,000 per year but, if you have the money, you can invest in another ISA as well to get you up to the total limit of £20,000. With the Government adding another 25% (up to £1,000) per year to your Lifetime ISA investments it’s a great product that allows you either to spend it on a house deposit or keep it for longer as part of your retirement fund.

Don’t forget the kids

The Junior ISA can create a wonderful nest-egg for your children, even if you can’t afford to put the full £4,368 in for them each tax year. Even a tenner a month from you and, maybe, some Christmas and birthday money from relatives, will grow over time to help them with education costs or a deposit on a house.

They can access the money when they’re 18 so if they’re under 13 when you invest for them it’s best to go for an Equities ISA or Innovative Finance ISA as they have time for the money to grow and ride out the ups and downs that both sectors can go through.

If they’re planning on taking the money out on their 18th birthday then move the investments over to Cash three or four years before to lock-in the gains. Talk them through the investments each year, though, so that they learn more about saving and investing and can make informed decisions about what to do with the money once they can control it themselves.

Mind the Budget!

Right now UK adults are allowed to put up to £20,000 per tax year (April 6th to April 5th) into some form of ISA investment, while under-18s can have up to £4,368 in their Junior ISA. These limits are set by the Chancellor of the Exchequer and are announced in the Budget.

It’s unlikely that the limits will be reduced in the Budget on 11th March but you never know. There are loud murmurs that the annual pension tax relief could be reduced. Right now you can put up to £40,000 a year into a pension and receive tax relief, but as of April that could go down.

So might the Chancellor claw back some cash from ISA investors too? Personally I think it’s unlikely. So far with ISA limits the only way has been up. But until it’s announced you can never be sure, so it’s wise to make the most of your ISA limit while it’s there…just in case!

And on to 2021

I say this every year (to myself as well as to readers): start your ISA investing as early as possible in the new tax year. It’s obvious, of course, that the earlier you start, the more your money will grow because it has more time in which to do so. But human nature is such that we tend to wait until the last minute to do important tasks. Think university essays, tax returns and getting that anniversary present to remember how hopeless we tend to be at dealing with looming deadlines!

So, if at all possible, set up a standing order on or just after 6th April from your account to the ISA product you would like to invest in. That way at least some money will already be in a lovely tax-saving product by the time you get to March 2021 and realise there are only a few weeks left to max-out your savings limit!

Get more tips and ideas for making and saving money by following Jasmine on Twitter at @Jasmine and on Instagram at @JasmineBirtles.

Find out how you can earn tax-free returns with the Funding Circle ISA.

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice.

To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here.

If you have any questions, please speak to your professional adviser or seek independent specialist advice.

By lending to businesses your capital is at risk. The tax-free entitlement of an ISA depends on your individual circumstances and may change. Funding Circle is not covered by the Financial Services Compensation Scheme.

Projected returns quarterly update – January 2020

At Funding Circle, our aim is to allow you to earn attractive, stable returns by lending to a diversified portfolio of creditworthy businesses. As part of this commitment, we regularly review our projected returns based on our assessment process, the interest rates at which you lend to businesses and the performance of loans.

Taking into account these factors and the mix of businesses in each lending option, following our most recent review we are making no change to the projected returns for either lending option.

What are the projected returns?

The projected returns are a forward looking estimate for loans added to your portfolio, and do not affect loans you already hold. Following last week’s loan performance update—which you can read more on here—the projected returns for our Balanced and Conservative lending options are not changing. They will continue to be:

Balanced: 4.5% to 6.5%

Conservative: 4.3% to 4.7%

You can see more information on how the projected return is calculated here.

What other factors can affect your return?

It’s important to understand that your actual return may be higher or lower than the projected return shown for your chosen lending option. This can be caused by factors such as:

  • Actual performance may be higher or lower than projected – for example, more businesses may be unable to repay their loans if macroeconomic conditions were to change, such as during an economic downturn. In addition, the individual businesses you lend to may perform better or worse than projected.
  • The number of businesses you lend to – as you are lending to your own individual portfolio of loans, not everyone will earn the same projected return. The return you achieve depends on the loans your funds are matched with, and the more businesses you lend to the better our lending tool will be at matching your funds to achieve the projected returns shown. Lending to more businesses also helps you earn a more stable return by reducing the impact of bad debt.
  • Your actual return is likely to change over time – the projected return is the annual return you could earn once all loans have been repaid and recoveries have been received from defaulted loans. Bad debts do not typically occur evenly over the life of a group of loans, and it often takes time for recoveries to be made on defaulted loans. This means your return is likely to change over time. You can read more about this here.

Will this affect the businesses you lend to?

These are the projected returns for your lending going forward, and do not affect any loans you already hold. We will review and, if necessary, update the projected returns every three months. We display projected returns for the past five years of loans on our statistics page, and update these every three months.

You do not need to do anything and, by having lending switched on, you will continue to lend to businesses automatically. As always, you can change your lending option or pause lending via the lending settings page of your account.

If you have any questions about today’s news, please get in touch.

Remember, by lending to businesses your capital is at risk and funds are not covered by the Financial Services Compensation Scheme.

The Funding Circle team

 

Chief Risk Officer’s UK update – January 2020

Jerome Le Luel joined Funding Circle as Global Chief Risk Officer four years ago; bringing with him more than 20 years of experience in risk management. His previous roles include Global Head of Risk Analytics at Barclays Bank and Global Chief Risk Officer at Barclaycard, where he successfully navigated their global portfolio through the 2008/9 recession.

Jerome leads a team of more than 100 risk professionals across the four markets Funding Circle operates in: including data scientists, credit risk analysts and credit assessment experts.

In the latest in our series, Jerome will provide his view on the current macroeconomic climate in the UK and what this means for the businesses you lend to

Some of the conditions driving uncertainty have eased

In my previous update we discussed how in the UK, increasing economic uncertainty was being driven by an unstable political environment. The key fundamentals remained stable in 2019; the economy has grown slowly but steadily and unemployment remains at historic lows. However, the uncertainty contributed to a decline in business confidence, with business investment and borrowing slowing down last year.

UK Small Business Confidence Index

Source: Federation of Small Businesses

We are politically neutral at Funding Circle, however last month’s election result provided some welcome clarity for the business community. This stability will help engender business confidence and as a result, I expect some of the investment that has been held back in recent years to be deployed into the UK economy. This would be good news for small businesses and those who lend to them, although it’s prudent to be cautious—there is still a lot unknown about how the Brexit process will eventually materialise. As always, we will continue to monitor the economic environment carefully and make adjustments when required.

Our performance outlook remains stable

Every three months, we update the projected returns for each group of loans originated since 2012. These are the annualised returns, after fees and bad debt, that loans are trending towards once all loans have been repaid and recoveries received. For each group of loans, we combine the actual annualised return received to date from the portion of loans that have repaid, and our latest estimates for the remaining term of the portion of loans that have not yet been repaid. 

Projected returns have remained stable since our last update in October:

Projected returns after fees and bad debt, UK*Source: Funding Circle

Our tightening actions have seen positive results

Previously I have discussed that while the overall performance of UK small business has remained stable in recent years, there has been a small segment of the market that has underperformed. From the chart below, you can see that a rise in the number of individuals that have been made insolvent—driven by a significant expansion in consumer borrowing since 2013—has had a knock-on effect on the insolvency rates of some small businesses; for example those who may be more reliant on lines of personal credit when managing their business cashflow:

UK small business and consumer insolvencies (Indexed, Q1 2008 = 100)Source: Gov.UK

While the large majority of businesses you lend to have performed as expected, the projected returns of loans between 2016 – 18 reflect that a small population of businesses were impacted by this worsening consumer credit environment. In response, we made a series of adjustments to our credit policies and risk models to significantly reduce investors’ exposure to this segment of businesses. You can see one example of this in the chart below: 

Average director consumer score (Indexed, Jan 2017 = 100)

Source: Funding Circle

The chart shows how the director consumer scores of businesses we accept on the platform has changed over time. The consumer score is the credit score given by a credit bureau based on the information they hold on a director. While this is just one of the many metrics we use to assess the businesses you lend to, you can see how investors are now significantly less exposed to businesses whose directors have a low consumer score – i.e. are more susceptible to the consumer credit environment.

I’m glad to say this prudent approach has yielded positive initial results. While loans taken out in 2019 are still in the early stages of their term, initial signs are showing improvement over the 2016-18 cohorts. As an example the chart below shows the percentage of loans, three months after being taken out, that were 10 or more days late.

Percentage of loans (by loan amount) 10+ days late, 90 days from origination 

Source: Funding Circle

It’s important to be clear that this is just one metric, and is not a guarantee of how these loans will perform over time. We are currently projecting loans taken out in 2019 to deliver annualised returns of 5 – 7% after fees and bad debts. 

Putting your portfolio through its paces

The increasing stability of the political and economic landscape means I am cautiously optimistic for the UK economy over the next twelve months. However, we are always preparing for a different outcome; after all, lending is cyclical. As Chief Risk Officer, part of my role is to help ensure your portfolio contains businesses with the resilience to continue providing positive returns even if economic conditions worsen.

To achieve this we regularly carry out stress testing. This involves taking an adverse scenario modelled by the Prudential Regulation Authority (and used by all major UK banks in their own testing) and applying it to the projected returns of loans being taken out today. Doing this allows us to simulate what could happen to these returns in a potential downturn situation. While it’s important to stress the nature of modelling means these projected returns are estimates, and are the returns we expect to deliver once all loans have been repaid and recoveries received, in this scenario we would expect them to remain positive:

2019 Funding Circle stress testSource: Funding Circle stress test 2019

Providing you with the foundations to help the economy grow

There has rarely been a more important time to be lending to the UK’s small businesses. In the past decade the number of SMEs has grown by more than 1 million.** Despite this, outstanding lending from UK banks to SMEs is 15% lower than it was in 2011:

Outstanding bank lending to UK small businesses (£m)

Source: Bank of England

This highlights the difference your lending is making; helping businesses create jobs and invest in their local communities. Continuing to carefully monitor the wider environment, making timely and prudent adjustments where necessary, will allow you to help the economy grow while earning stable and attractive returns.

We hope you have found this information useful. If you have any questions, please don’t hesitate to get in touch, and remember by lending to businesses your capital is at risk. Not covered by the Financial Services Compensation Scheme.

Jerome Le Luel

*Projected returns as of 31st December 2019. The projected annualised return shows the return, after fees and bad debt, that loans are currently estimated to achieve. Loans are shown by the year they were taken out. The return is calculated by combining the actual annualised return received to date, and our latest return estimates, including expected recoveries, for the remaining term of loans that have not yet been fully repaid. Past performance is not a guarantee of future returns and by lending to businesses your capital is at risk.

**Source: UK SME numbers in 2010 and 2019

Disclaimer

This material contains certain tables and other statistical analyses that have been prepared by Funding Circle. Numerous assumptions have been used in preparing this statistical information, which may or may not be reflected in the material. The statistical information should not be construed as legal, tax, investment, financial, or accounting advice. The Information is provided as of the dates shown and is subject to updating and revision, and may change materially without notice. Subject to applicable regulations, no person is under any obligation to update or revise the information. The information may contain various forward-looking statements, which are statements that are not historical facts and that reflect Funding Circle’s beliefs and expectations with respect to future events and financial and operational performance. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond the control of Funding Circle and which may cause actual results or performance to differ materially from those expressed or implied from such forward-looking statements. Nothing contained within the information is or should be relied upon as a warranty, promise, or representation, express or implied, as to the future performance of any loans. Any historical information contained in this statistical information is not indicative of future performance.

Get up to £450 in John Lewis vouchers when you add and lend funds

For a limited time only, you can receive gift vouchers when you lend £5,000 or more through your Funding Circle account! Transfer funds into your account today and you could treat yourself to an Apple Watch, an Amazon Echo, a new wardrobe or whatever you need with John Lewis gift vouchers. 

What value John Lewis vouchers can I claim?

The amount you receive depends on how much you add to your account and lend to businesses:

  • Add £45,000 to get £450
  • Add £35,000 to get £350
  • Add £25,000 to get £250 
  • Add £15,000 to get £150
  • Add £5,000 to get £50 

What do I need to do?

Add funds to your account between the 30th October and 31st December 2019 to get the voucher amount you want, then lend it out to businesses. After the 31st December, we’ll look at the amount added to your account during this period minus any withdrawals. This will determine the how much you’ll qualify for. If you have both ISA and Classic accounts, we’ll look at the amount added between them. 

You also need to have lending switched on and keep those funds lent out until 29th February 2020. If you withdraw funds (from either your Classic or ISA account) you may receive a lower voucher amount or no longer qualify. We’ll then send your vouchers out to your registered email address. For full terms and conditions click here

Transfer funds now

Can I use my ISA and Classic accounts? 

You can only claim one gift per person. If you have only an ISA account and have used up your ISA allowance, you can either transfer existing ISAs you hold from other providers, or open a Classic account. 

If you have both an ISA and Classic account registered to the same email address, you can split the extra funds between the two. However, if you withdraw from one and transfer to the other, you won’t qualify for a gift. We’ll look at the net amount added between the two. 

Can I transfer an ISA from an existing provider?

You can also transfer existing ISAs from other providers. In order for your ISA transfer to qualify, you need to fill out the ISA transfer form in your Funding Circle account between the 30th of October and 31st of December 2019. The ISA transfer form must be complete, with funds distributed to your Funding Circle account and lending switched on, by midnight on 29th of February 2020. 

Transfer funds now

For more information email us at contactus@fundingcircle.com. Terms and conditions apply. 

By lending to businesses your capital is at risk. Not covered by Financial Services Compensation Scheme. Your tax-free entitlement depends on your circumstances and may change.

Enjoy lending!

Looking forward to 2020 and what it means for our introducers

Since its formation in 2012, our broker channel and introducer panel has continued to be integral in our success. This community has supported £1.3 billion of lending over 15,000 loans through Funding Circle, helping numerous businesses and unlocking thousands of jobs as a result. In turn, our registered introducers have grown their businesses too. 

We recently announced the promotion of Jeremy Crinall to the Head of Broker. Since joining in 2014, Jeremy has worked as a Business Development Manager (BDM) and as Regional Manager for Southern England. He has worked closely with all the team in their respective sub regions and is looking forward to using his 13 years of experience in the financial industry to assist the growth and development of the team, their panel of introducers, and building on those relationships even further. 

Jeremy has big plans for 2020 and sees three key areas to focus on for the next stage of success:

Service

Our team consider all our introducers as long term partners. We see them as relationships for life. We’re going to focus our efforts on improving the experience of all our introducers and their clients. We’re going to be focusing on optimising all touch points for our introducers and their clients and getting to know all our introducers on a greater level. This will enable our team to continue to go even further to provide them with the excellent service that they deserve.

Technology 

Technology will continue to be a pivotal focus for us and the team as we turn into the new year. We’ll continue to strive  to provide best-in-class solutions and to provide our introducers with even quicker decisions. We’re planning on making a lot of improvements across the business, which will ultimately benefit the broker channel and in turn, the service we’re able to provide.

People

As our plans for lending continue to grow in 2020, we want to look to build the team and further invest in our people. We strive to recruit the best individuals from a diverse range of backgrounds and experiences to ensure we can provide our introducers with an excellent service. We’ll also be looking to develop our existing team members. Both Business Development Executives and Business Development Managers receive continuous training and specialised courses, ensuring we have the right people in the right places. . 

2020 is going to be another amazing year for the entire introducer community and we want to remain at the heart of that at Funding Circle. We’re looking forward to the future and working with our introducers as we move towards 2020. We recognise the importance you will play as we continue to build a better financial world.

Loan Purposes we can help with

At Funding Circle we want to help fund all of your clients’ business needs. Every business has unique requirements and will be at different stages in their journey, so our loans can be used for a huge variety of needs.  Some of the most popular include:

Working capital – Working capital is the lifeblood of any business. Healthy cash flow allows business owners to pursue new opportunities and win more business. It saves them time, gives them greater peace of mind, and the breathing space to make the best long term decisions for them.

Refurbishment of premises – From office space to shop fronts, refurbishing business premises can be transformative. We can provide finance for refurbishment and spread the repayments over 5 years.

Hiring staff – The entire process of taking on extra staff can be costly and time consuming. Taking finance can allow  your clients to either outsource this process or conduct it in house. We’ve helped thousands of businesses for this very purpose. 

Buying new equipment/machinery – Equipment and key pieces of machinery can breakdown unexpectedly or become out of date. Often, this can be a significant outlay and cause delays in production. We can provide finance for business owners to purchase equipment and machinery. All our loans are unsecured (backed by a personal guarantee) so this means your client would own the equipment from the outset.

Deposits for property purchases – Business owners will often need full deposits before being able to apply for commercial mortgages. We can provide the funds for this, which means your clients can go to their bank, secure the full mortgage and then settle in full with us. They can repay in full with no early settlement or exit fees, making the process ideal for this scenario.

Stock purchases – Many of your clients will go through busier and quieter periods. It is important that they are prepared and can take advantage of busier times. We can help with providing finance for large stock purchases, which can provide your clients with peace of mind and often reduce overall costs.

Tax funding – Tax bills can creep up on business owners and often leave large unforseen dents in their cash flow. We can provide finance to cover the bill and spread cost out over up to 60 months. 

Funding a new project or product – For your clients, it is imperative that they stay commercially competitive and come up with new ideas to engage their current client base and attract new customers.

Refinancing existing debt – We also offer loans to refinance existing business debt. As long as the debt is registered under the business rather than anyone personally we can look to consolidate that into one repayment. This can often be easier to maintain and can reduce your monthly outgoings, assisting with cash flow.

What can’t we cover?

There are a few loan purposes that we are unable to help with: 

Refinancing of personal debt – We’re unable to provide finance for the consolidation of personal debt. Even if the debt was taken out for the purpose of benefiting the business, if it  is under a personal name we’ll be unable to help.

Onwards lending – We can’t help if the funds are going to be passed outside the business that has applied to either an individual or another business. The finance we provide must stay within the business and directly benefit the business is applying.

Speculative ventures that aren’t related to the core activity of the business – We’ll need to see how the loan purpose will benefit the business. It cannot deviate too far from the core activity of the business. For example, if your client owns a bakery but wants to expand into I.T. sales, this wouldn’t be something we could provide finance for.

Are you a looking for fast, affordable funding solution for your clients now?

Get in touch with our Partnerships Team at ukpartners@fundingcircle.com or give them a call on 0203 308 9708.

Meet the Credit Assessment team

At Funding Circle we want to help you earn attractive, stable returns by lending to small businesses across the UK. Of course, one of the key aspects of achieving this is having a robust methodology to carefully assess the businesses you’ll be lending too. To give you a bit more insight into how this process works, we caught up with Henry, Fay and Edward in the Credit Assessment team to ask about their role at Funding Circle.

First, can you tell us where your team sits in the overall funding process?

 

Henry – When a business applies for a loan online, there are several checks that happen automatically. For example we pull information from Companies House to check how old the business is, and we’ll run credit checks with credit bureaus like Experian. Some businesses will not meet our criteria straightaway, the rest will pass onto a full assessment.

To assess an application, our Loan Analyst team will collect all the information we need. This includes their full credit report, business bank account data, details on the business shareholders and financial accounts with profit and loss information. They’ll then use our bespoke internal risk models to give a risk grade to each business.

They then pass that information on to us. We look at their application, their credit score, other external data sources and all the other information available to us. We then use our internal credit criteria to decide whether we can make them an offer.

When it comes to making a decision, what do you factor in?

 

Edward – There are hundreds of data points that go into every assessment. Naturally key factors include the financial health of the business, their debt history, and how much they can afford to pay back each month. 

It’s also important that they are asking for money for the right reasons. We support a wide variety of loan purposes, but there are some that we don’t support. 

Fay – It’s not always about approve or decline, we take a holistic view of the business. We look at the potential risks. We want to give a quick decision to business owners, but not at the expense of carrying out a serious assessment. All cases get looked at with due diligence, if it’s more complex and takes more time, that’s what we’ll do. 

You mentioned that you use internal models, how are these created?

 

Fay – Our Risk team uses huge amounts of data and cutting-edge techniques to develop our assessment models. They are constantly updating them too, feeding in more data, adapting to wider economic conditions and so on.

We sit right in the middle of investors and the businesses they lend to. We want to help investors get the best returns possible, and, if they meet our criteria, help small businesses get finance at a price that’s fair to them. Our risk models help strike that balance. 

Henry – The way I see it, the Risk team are like the FA and we’re the referees – they set out the rules, we apply them. 

How much experience does the team have?

 

Fay – Across the assessment teams we have decades of experience from a wide variety of financial institutions. For example I was previously at another fintech company and before that was in asset finance for 5 years. 

Henry – I joined Funding Circle 5 years ago and have worked my way up in the Credit Assessment team.

Edward – I’ve previously worked at Deloitte in corporate tax and at a payments company. We all chip in and help each other too, especially with the more complex cases. There’s tonnes of experience in the team we can all draw on. 

 

 

Do you have any other responsibilities?

 

Fay – Obviously our main role is assessing loan applications, but we also run or support other projects to help us improve or adapt to external changes. I worked on a project 

regarding the legislation around Company House, how it was changing and how that would impact our process. 

Edward – I look at how the team operates, what are our strengths and where we can improve. 

Henry – I attend meetings with our brokers. We have long-standing relationships with many of them, and I join to answer any questions so they can refer the right businesses to us.  

What’s the culture like on the team?

 

Henry – We have a really open working environment, no one is tucked away in an office. If we have questions or need help, we have many people from different backgrounds, different experience levels and different areas of expertise, and there’s an attitude where everyone knows they can get advice when they need it.

Edward – There’s openness and respect too. A new joiner is happy to go and ask someone with 20 years experience because they want you to learn. 

Fay – We’ve got a really well mixed team. There’s people who have been through the Funding Circle journey and have worked their way up, and there’s people that have joined from different backgrounds. We’re not afraid to share our different perspectives. 

Edward – Breakfast is important too – we all go for toast together in the morning. 

Fay –  I get in trouble sometimes because I go earlier…

How does it feel to work for a company that’s helping businesses and investors? 

 

Edward: It’s really cool. I saw a shop the other day and I thought ‘Aha, I know that business!’ because they had been a customer of ours. You can see the difference you’re making. When working at some other businesses, customers are just treated like numbers on a system.

Fay: With Funding Circle we’re having a wider impact for small businesses and we’re filling that gap in the market for investments. It’s really rewarding. 

That’s amazing, thank you for taking the time to speak to us!

 

World Photography Day

World Photography Day is an annual, worldwide celebration of the art, craft, science and history of photography. We all love a good photo, whether we’re looking at it in a gallery or whether we’re scrolling past it on Instagram; the art of photography is one to be honoured. We’ve chosen to honour photography by putting together a list of our favourite photos from members of the Funding Circle team and photos of businesses we’ve worked with.

Funding Circle’s very own Inti Libermanares, describes himself as a photographer and says what he loves most about photography is the possibility to capture a moment in an artistic and creative way. He loves being able to convey feelings out of spontaneous situations and his work above does just that.

 

Taken while travelling before he joined Funding Circle, wordsmith Robert McCorquodale says the photo pictures a single flamingo on the edge of a volcanic lake, near to the salt flats in Bolivia. This almost looks like a painting if you don’t look too closely!

 

Our resident design master, Alex Santos, makes it very clear that this is not from Game of Thrones and that it’s a hidden beach with mighty difficult access called ‘Praia da Ursa’, or the Bear beach, in Portugal near Cape Roca. Kings Landing or not, we think this photo is stunning.

 

Family owned business Perky Blenders, is in the art of speciality coffee, with five locations across the east side of London, these guys are sharing the coffee love with as many people as possible. These photos were taken when we took a trip down to one of their shops and were lucky enough to watch them do their magic.

 

Located in Redcar, on the Yorkshire coast, Yorkshire Gelato Company pride themselves in taking desserts to the next level and creating beautiful works of art to finish any meal using the finest ingredients. As you can see form the photo above, they really love their desserts!

 

The Great Yorkshire Shop hand picks fine goods exclusively from local independent makers, artists and designers. Based in Leeds, their store is bursting with amazing creative gift items and you can feel that the owner really loves what he does. The photos above were taken during our previous visit and we loved it there.

Share your favourite pieces of photography with us on social media at @FundingCircleUK

Get John Lewis vouchers when you add funds and lend it to businesses

For a limited time only, you’ll receive gift vouchers when you add £15,000 or more to your Funding Circle account! Transfer funds into your account today and you could treat yourself to an Apple Watch, Sonos Smart Speaker, Amazon Echo or whatever you need with John Lewis gift vouchers.

What value John Lewis vouchers can I claim?

The amount you receive depends on how much you transfer into your account:

  • Add £50,000 to get £400
  • Add £30,000 to get £250
  • Add £20,000 to get £150
  • Add £15,000 to get £100

What do I need to do?

Firstly, you need to register your account for the promotion. Simply login to your account, go to the Transfer in page and enter your email address on the pop up window.

Then you need to add funds to your account between 21st of February and 31st of March 2019 to get the voucher amount you want. On March 31st, we’ll look at the amount added to your account during this period minus any withdrawals. This will determine the vouchers you’ll qualify for. If you have both ISA and Classic accounts, we’ll look at the amount added between them.

You also need to have lending switched on and keep those funds lent out until 21st of June 2019. If you withdraw funds (from either your Classic or ISA account) you may receive a lower voucher amount or no longer qualify. We’ll then send your vouchers out to your registered email address. For full terms and conditions click here.

Register and transfer funds now

Can I use my ISA and Classic accounts?

You can only claim one gift per person. If you have only an ISA account and have used up your ISA allowance, you can either transfer existing ISAs you hold from other providers, or open a Classic account.

If you have both an ISA and Classic account registered to the same email address, you can split the extra funds between the two. However, if you withdraw from one and transfer to the other, you won’t qualify for a gift. We’ll look at the net amount added between the two.

Can I transfer an ISA from an existing provider?

You can also transfer existing ISAs from other providers. In order for your ISA transfer to qualify, you need to fill out the ISA transfer form in your Funding Circle account between 21st of February and 31st of March 2019. The ISA transfer will need to be complete, with funds distributed to your Funding Circle account and lending switched on, by midnight on 21st of June 2019.

Register and transfer funds now

For more information call us on 020 7401 9111 or contactus@fundingcircle.com. Terms and conditions apply.

By lending to businesses your capital is at risk. Not covered by Financial Services Compensation Scheme. Your tax-free entitlement depends on your circumstances and may change.

Enjoy lending!

The Funding Circle team

John Lewis is not a participant in or sponsors of this promotion. All related John Lewis logos are trademarks of John Lewis Partnership plc 2013.

Looking back on the last three months: October – December 2018 review

Happy New Year! As we look forward to what 2019 has in store, we wanted to take a step back and celebrate what investors like you have achieved. As part of this, last week we updated our statistics page with our lending and performance figures up to 31st December 2018. Read on to find out more.

You’ve helped a record number of small businesses grow

Between October and December last year, investors lent £680 million to small businesses across the UK, US, Germany and the Netherlands; bringing the total lending for 2018 to approximately £2.3 billion.

In the UK alone, more than £440 million was lent to UK small businesses between October and December. Alongside 79,000 investors, in 2018 you lent more than £1.5 billion to UK businesses. When you remove repayments received this year from that figure—what we call net lending—you have provided approximately £725 million of new funding to businesses all over the UK, an incredible achievement!

More of our key lending figures can be seen below:

You help all types of businesses from all over the UK

By lending through Funding Circle you make a huge difference to all kinds of businesses throughout the UK. With your help they’re able to grow, create jobs, develop new products and support local communities. Below is a breakdown of the sector and location of the UK businesses currently accessing finance through the Funding Circle platform.

 

An update from our Chief Risk Officer

In December our Chief Risk Officer, Jerome Le Luel, provided his insight into how the macroeconomic environment has impacted loan performance in the markets Funding Circle operates in, and what we have done to help ensure you continue to earn attractive returns. In the UK, loans taken out since 2012 are projected to deliver returns of between 4.7 – 7.3% per year, after fees and bad debt.*

Although the economic environment for small businesses in the UK remains strong, the outlook for consumer credit in the UK has worsened in recent years. This has impacted a small population of loans in our higher risk bands who can be more susceptible to shifting trends in the consumer credit environment. These headwinds are reflected in the projected returns for our 2016 and 2017 cohorts, the most recent of which can be seen on our statistics page. You can read Jerome’s update in full here.

We’re excited for the year ahead

We’re looking forward to what 2019 will bring. Following our public listing on the London Stock Exchange last year, we believe we’re in a strong position to help you lend to more small businesses than ever before, earning an attractive return while helping the UK economy to grow. Remember, by lending to businesses your capital is at risk, and your funds aren’t covered by the Financial Services Compensation Scheme.

Enjoy lending,

The Funding Circle team

*Projected returns for loans taken out in the UK between 2012-2018, as of 31st December 2018. The projected annualised return shows the return, after fees and bad debt, that loans are currently estimated to achieve. Loans are shown by the year they were taken out. The return is calculated by combining the actual annualised return received to date, and our latest return estimates, including expected recoveries, for the remaining term of loans that have not yet been fully repaid. Past performance is not a guarantee of future returns and by lending to businesses your capital is at risk.

Introducing an improved and simplified Summary page

At Funding Circle, we want you to have a clear and simple view of your portfolio. As part of this, we have redesigned your Summary page and are excited to announce this is now live.

We have redesigned the Summary page to provide a snapshot of your account, with more detailed information easily available. The video guide below provides an overview of how you can navigate around the new pages to access all the information you need.

 

Providing a clear view of how your account is performing

Previously, we showed investors three different returns: gross yield, an annualised net return and an estimated fully diversified return. We have received feedback that showing three returns can be confusing, so to make this simpler you will now only see one return in your account, an annualised return.

The annualised return represents how your account is currently performing and is calculated after fees and bad debt. This links directly to your investment earnings and will help you to evaluate how your account has performed since you started lending through Funding Circle. The return is calculated in the same way as the previous annualised net return.

It’s worth remembering that your annualised return will change over time. Data at Funding Circle shows bad debt rarely occurs evenly over an investment period, and is typically concentrated during certain periods of a loan’s life. This means returns generally will dip, then begin to increase as recoveries arrive. You can read more about how returns change over time on our blog.

We have withdrawn the accrued interest figure

Your accrued interest is the interest that has built up, but not yet been paid, since the last payment by a borrower. As this is not money that has been actually received, this figure has now been withdrawn to provide a simpler view of your portfolio total. It is still possible to view the amount of interest due for each loan part via your repayment schedule.

If you have any further questions, please feel free to contact us. Remember, by lending to businesses your capital is at risk.

The Funding Circle team

VIDEO. Three thriving Scottish businesses, thanks to your support

The patron saint of Scotland, St Andrew was known for being strong, sociable and fair. Characteristics that Scots are proud to stand for, they celebrate St Andrew’s Day with acts of kindness and good deeds on the 30th November each year.

Whether you’re dancing a ceilidh, hiking around Loch Lomond or just knocking up some tatties and neeps, it’s a day to enjoy all things tartan. Plus as an official holiday, you get the day off work if you’re north of the border.

To join the celebration, we visited three thriving Scottish businesses: The Good Spirits Company, Alex McDougall Mowers and Highland Wi-Fi. All three businesses have been able to go further, thanks to the fantastic support of Funding Circle investors.

In this video you’ll meet Calum, Alex & Shirley and Matthew. They talk about why they’re proud to be a Scottish business and how support from Funding Circle has helped them achieve their business goals.

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£1 billion lent through our Introducer team

2018 has been an incredible year at Funding Circle. A few weeks after listing on the London Stock Exchange, we’re proud to announce that our Introducer team has reached the milestone of £1 billion lent since it was formed in 2012.

To mark this occasion, we spoke to Luke Hultquist and Stuart Sterling from Halo Corporate Finance, one of the first introducers to work with us when we launched the Introducer channel.

Find out why Luke and Stuart choose to regularly introduce clients to Funding Circle in the video below. Our Head of Broker, Tom Shave, also discusses what’s coming up in 2019 and reveals the long term vision for the broker channel.

As our introducer network continues to grow across the UK, we’ll be able to help even more businesses access finance, supporting the economy and creating jobs.

Are you a commercial finance broker looking for a fast, affordable funding solution for your clients?

Get in touch with our dedicated Introducer team at introducer@fundingcircle.com or give us a call on 020 3667 2208

Lending directly to small businesses to create entrepreneurship scholarships

The University of Huddersfield has lent to over 2,000 UK small businesses through Funding Circle, thanks to a partnership where the University became the first to lend directly to businesses through a lending platform. Launched in 2013, the tie-up has created opportunities for students through entrepreneurship scholarships. Professor Bob Cryan, Vice-Chancellor at the University said: “I was originally drawn to Funding Circle because I felt that the platform’s innovative approach to investments and small businesses was a strong match to the ethos of the University.” 

Four years on, the University continues to lead the way in this area, having committed a further £1 million to the programme in 2014 after the initial investment of £100,000. One of the local businesses that has benefitted from the University’s lending is Ushiwear, a British clothing brand launched by husband-and-wife team Neil and Jilly Kapusi. The passionate duo were able to build on their success and go for growth after accessing finance through the platform.

Neil Kapusi, co-founder and COO of Ushiwear

“The capital injection from the University through Funding Circle has allowed Ushiwear to grow exponentially. We’re now currently in the process of a complete brand overhaul with everything from a new website, to a new shop, to new product lines. We’ve been able to invest in new equipment, boost our advertising and marketing and expand our team.” said Neil.

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